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USITC Report

The USITC report on the status of the olive oil market in the USA has received comment from many interest groups. The report provides very useful data on the world trade in olive oil and particularly the US market. As with many of these reports it gives every lobby group selective arguments to support their case.

One important analysis from the report, the econometric study of demand elasticity (‘ how demand for one oil is affected by price changes in another’) has received little comment. In summary the analysis leads to the following conclusions:

‘retail consumers largely consider domestic olive oil to still be a niche product, such that their purchases are less motivated by cross-price relationships than by some other intrinsic attributes of the product, such as the product’s domestic origin or its reputation for high quality.’

‘domestic olive oils are being purchased by a particular type of consumer and have not yet achieved mainstream status.’

‘consumers appear willing to switch between branded foreign extra virgin, private label extra virgin, and other grades of olive oil in response to a change in price of one of the other categories.

In essence the Report is saying the connection between prices of imported olive oils and those locally produced are tenuous.